Rhode Island’s cannabis social-equity system was supposed to create real opportunity for people and communities harmed by prohibition. Instead, delays, high barriers to entry, and a difficult licensing process have left many people without the access or opportunity the law was meant to provide.
Alan Gordon is proposing a Cannabis Social Equity Credit Pilot that would let licensed cannabis businesses earn verified Social Equity Units by providing measurable public benefits — including free qualifying products for eligible medical patients, mentoring and technical assistance for social-equity applicants, and other approved support.
Alan is asking Governor Dan McKee to launch the pilot by Executive Order, begin measuring verified benefits now, and ask the General Assembly to authorize a capped Rhode Island tax credit based on those results.
Below are Alan’s letter and the proposed Executive Order.
Proposed Executive Order
STATE OF RHODE ISLAND
EXECUTIVE DEPARTMENT
EXECUTIVE ORDER 26-__
ESTABLISHING THE RHODE ISLAND CANNABIS SOCIAL EQUITY CAPACITY PILOT
WHEREAS, Rhode Island has established a regulated cannabis market and a social-equity framework intended to expand participation by individuals and communities disproportionately affected by prior cannabis prohibition;
WHEREAS, meaningful participation in the regulated cannabis market may be hindered by startup costs, regulatory complexity, access to equipment, testing, compliance expertise, distribution capacity, and other barriers;
WHEREAS, Rhode Island’s existing licensed cannabis businesses possess lawful production, technical, logistical, and professional capacity that may voluntarily be used to support qualified social-equity participants and eligible medical patients;
WHEREAS, the State has an interest in evaluating whether verified use of such existing capacity can expand access and opportunity without creating an open-ended public expenditure;
NOW, THEREFORE, I, DANIEL J. McKEE, GOVERNOR OF THE STATE OF RHODE ISLAND, by virtue of the authority vested in me by the Rhode Island Constitution and applicable law, do hereby order and direct as follows:
1. Establishment
There is hereby established a temporary Rhode Island Cannabis Social Equity Capacity Pilot (“Pilot”).
The Cannabis Control Commission, in consultation with appropriate executive agencies, shall develop a framework for voluntary participation to the extent permitted by existing law.
2. Qualified Participants
The Pilot may include licensed Rhode Island cannabis businesses and other persons or entities lawfully authorized to provide qualifying services or products.
Participation shall be voluntary.
3. Qualified Public-Benefit Activities
The Pilot may recognize verified activities including:
(a) provision of qualifying cannabis products without charge to eligible registered medical patients;
(b) technical or compliance assistance to certified social-equity applicants;
(c) approved mentoring, workforce development, or business-development assistance;
(d) lawful sharing of equipment, testing, packaging, production, or distribution capacity; and
(e) other activities approved by the Commission as advancing the purposes of Rhode Island’s cannabis social-equity framework.
4. Verified Social Equity Units
The Commission shall establish standardized units for measuring qualifying public benefit.
Such units shall be based on objectively verifiable activity and shall not be calculated from a participant’s claimed retail value.
Examples may include:
- a defined quantity of qualifying product delivered to an eligible patient;
- an approved hour of technical assistance;
- completion of an approved compliance milestone; or
- use of designated production or testing capacity for a qualified social-equity participant.
5. No Present Monetary or Tax Value
Verified Social Equity Units created under this Order are for measurement and evaluation purposes only.
They shall not constitute compensation, property, an entitlement, or a tax credit.
Nothing in this Order creates a right to payment or future tax treatment.
6. Medical-Patient Access Component
The Commission may evaluate a voluntary component through which qualified licensed participants provide approved cannabis products without direct charge to eligible registered medical patients, subject to all applicable tracking, testing, packaging, possession, and distribution requirements.
Nothing in this Order expands medical-patient eligibility or waives existing cannabis laws or regulations.
7. Social-Equity Business Support Component
The Commission may establish procedures for matching qualified social-equity applicants with participating licensed businesses capable of providing approved technical, operational, or infrastructure assistance.
The Pilot shall include appropriate safeguards concerning conflicts of interest, related-party transactions, ownership influence, and duplicate benefits.
8. Legal and Fiscal Review
The Department of Administration, Division of Taxation, and other appropriate agencies shall evaluate:
(a) whether any component of the Pilot can be implemented under existing law;
(b) what statutory amendments may be required;
(c) the fiscal implications of a capped Social Equity Credit; and
(d) safeguards necessary to prevent duplicate compensation, improper valuation, or misuse.
9. Future Tax-Credit Recommendation
The participating agencies may recommend legislation providing a non-refundable, capped Rhode Island Social Equity Credit based on verified units generated through the Pilot.
Any such credit shall require separate legislative authorization and should include:
- individual and aggregate caps;
- standardized credit values;
- audit and reporting requirements;
- restrictions on related-party transactions;
- recapture provisions where appropriate; and
- an automatic sunset.
10. Data and Evaluation
The Pilot shall collect aggregate information sufficient to evaluate:
- participation;
- services and products delivered;
- benefits received by qualified social-equity participants;
- medical-patient access;
- administrative costs;
- regulatory issues; and
- recommendations for continuation, modification, expansion, or termination.
Personally identifiable patient information shall be protected as required by law.
11. Existing Law Preserved
Nothing in this Order shall:
(a) waive cannabis licensing requirements;
(b) authorize conduct otherwise prohibited by state or federal law;
(c) create or modify a tax liability;
(d) appropriate funds;
(e) create an entitlement;
(f) alter ownership restrictions or licensing criteria; or
(g) impair the authority of the Cannabis Control Commission or General Assembly.
12. Report
Within 90 days of commencement, participating agencies shall submit an initial report to the Governor describing implementation, results, legal issues, fiscal considerations, and any recommended legislation.
13. Duration
This Order shall take effect immediately and shall expire 180 days after commencement of the Pilot, unless extended, modified, or terminated pursuant to law.
So Ordered:
Daniel J. McKee
Governor
Date: __________________